Building the budget: after the Autumn Statement

The joint letter from the Leaders of Kent and Hampshire came a few days before the Chancellor’s Autumn Statement (17 November).

The Statement was in many ways better than expected for local authorities, at least upper tier councils with social care responsibilities. There was £1bn extra for social care in 2022-23, rising to £1.7bn in 2023-24 (60% via the NHS, the remainder through the local government settlement); the social care charging reforms were delayed, but councils are able to keep the funding associated with them; and councils have the ambiguous opportunity to raise more council tax, with the referendum limit (for social care authorities) rising from 3% to 5%.

All this has made a big difference to KCC (and other authorities) in setting their budgets. But it does not stop the requirement to make very difficult and painful savings decisions - it simply reduces somewhat the mountain to be climbed. Nor does it resolve the longer-term issues central to the Kent/ Hampshire letter. As I wrote in an article for the New Statesman, “the wolf is still at the door, even if he is no longer in the kitchen”. I have written in similar terms in the Municipal Journal.

At tomorrow’s Cabinet meeting, we will consider the latest financial monitoring report, which shows a projected overspend of £60 million for this financial year. The process of building next year’s budget, now in its later stages, has been helped by the Autumn Statement but is still exceptionally challenging. 

The Kent-Hampshire letter: we cannot go on like this

Yesterday the Leader of Hampshire, Rob Humby and I published a joint letter which we had written to the Prime Minister, Chancellor and the Levelling Up Secretary. In this we set out our concern that both councils face unsustainable financial pressures. 

The reasons for this are quite clear. Councils across the country have had to deliver huge savings (over £800 million in the case of Kent County Council) over the last decade or so. The pressures of core services to vulnerable people, notably adult social care and children’s services have continued to grow ahead of the resources available to councils. This year’s surge in inflation has added to our costs (some £45 million in the case of KCC) without having a matching effect on revenues. 

As a result, KCC is currently (after the first six months of the financial year) projecting an overspend of £60 million in 2022-23, and over £100 million for 2023-24. Perhaps most seriously, there is no prospect of achieving a sustainable financial position, and even the severe cuts in services which we are now considering may well not be enough to avoid a financial crunch and, over time, the need to issue a Section 114 notice that freezes all non-essential council spending.

Hampshire and Kent are similarly large and historically strong county councils. We recognised that we face similar problems, as does much of the local government sector; our voices add to the strong case being made by organisations such as the County Councils Network and the Local Government Association. 

Coming ahead of the Chancellor’s statement on Thursday, the letter has generated a lot of media interest. Above all, we are arguing that, while any solution can embrace a combination of funding support (in particular, in relation to adult social care), decisions about council tax and changes to legislative requirements on councils, there is one option that we cannot pursue: that is to continue as we are.